Cost of US Health Insurance Rises Only 4% in Past Year Partly Due to Health Care Reform

by Thilaka Ravi on Sep 12 2012 7:07 AM

 Cost of US Health Insurance Rises Only 4% in Past Year Partly Due to Health Care Reform
A report published Tuesday showed the cost of health insurance in the United States rose only moderately over the past year, partly because of President Barack Obama's health care reform.
The cost increase was four percent, higher than the 2.3 percent inflation rate, but considerably slower than in recent years.

"Rates of increase in total health spending have been holding at four to six percent per year recently, and per capita spending -- which is most analogous to premiums -- has been rising about a percentage point below that," said Drew Altman, president and CEO of the Kaiser Family Foundation, which conducted the study with another group, Health Research and Educational Trust (HRET).

The study surveyed 2,000 employers about what they paid to provide health insurance for their workers this year compared to last.

"Double digit increases in premiums were once a common occurrence, but we have not seen any since a 10 percent increase in 2004 and 13 percent growth in 2003," said Altman.

In 2012, health insurance, which in the United States is typically provided by an employer, cost $15,745 dollars for a family of four. The report said that the average insured worker also had out of pocket expenses of about $4,316 dollars.

Obama's health care bill -- formally known as the Affordable Care Act -- was signed into law in March 2010, with most of its provisions going into effect in 2014.

The report also credited the lagging economic recovery and a reticence by some consumers to use health care services in a time of financial insecurity.

"These are strikingly low numbers to those of us who have been studying health costs for a long time. A four percent increase in health premiums is good news, although good news is seldom 'news'," Altman said in his statement.

"In tough times, when wages are flat, people avoid using the health care system if they can," he continued.

"We also know that higher out-of-pocket costs deter utilization, so it's reasonable to assume that the growth of high-deductible plans and other forms of cost sharing has had an impact on health care use, magnifying the effect of the economy.

Since Obama passed his health reform law as one of the first major achievements of his presidency, the nation has been embroiled in a debate as to what kinds of reforms are needed for the health insurance industry, and whether the reforms he and Democrats in Congress came up with were the right ones.

Bashing the Democratic president for the controversial reforms has been a favorite talking point among opposition Republicans and with Mitt Romney, the party's standard bearer in the November 6 presidential election.